Our return to normalcy will be judged by salads
Sweetgreen's starting to see a bump in business, but analysts say the company's success depends on more than its tech
And we’re back!
I suspect every freelance writer has a list of stories they’re dying to write knocking around their brain somewhere, just waiting for the time, energy, and inspiration to get it onto the page. The New York Times Business section ran one of mine this week — though I didn’t write it. Sapna Maheshwari, a very capable Times business reporter, did, and I’ll tell you why I find it fascinating.
The piece is about Sweetgreen and returning to work and, ostensibly, the $15 salads we’ve all eaten at an office desk. “Covid’s over,” Sweetgreen’s CEO declared in the piece. Clearly, that’s not true, but by any measure — the Sweetgreen salad index, a metric I just made up, included — life is inching back to what it used to be. This isn’t a tech story per se, but since we’ve all heard “Sweetgreen’s not a salad company it’s a tech company” before, I’m going to take some liberties.
“You’re starting to see these really nice increases as people are slowly returning to the office,” Sweetgreen CEO Jonathan Neman told the Times, noting that Labor Day will serve as a real indicator of what’s to come since many companies have indicated that’s when employees will start to return to offices.
Judging society by a restaurant metric isn’t a novel thing. You’ve probably heard about FEMA’s Waffle House Index, an informal metric that helped the Federal Emergency Management Association gauge the severity of natural disasters like hurricanes or tornadoes. The chain has a reputation for its continuous service and disaster preparedness, so looking at the closure rate of Waffle House restaurants in a given disaster-affected area is an empirical way of qualifying the scope of disaster. It’s used alongside other metrics to get a handle on the situation — no one restaurant chain can accurately gauge exactly what’s happening on the ground, but they can be strong signals of reality.
Sweetgreen’s current reality includes an accelerated expansion into the suburbs, including that still-to-be-opened tech-enabled drive-thru location in Colorado. It’s a divergence from its core strategy to saturate urban markets with high volumes of office workers and residents concentrated in one place, but it’s a necessary step for continued post-pandemic growth and expansion.
Before Covid, Sweetgreen had a unique feature that was driving much of its urban growth: 1,000 “outpost” locations, centralized pickup spots, usually for office workers but also in large residential buildings, where orders placed earlier that day were placed on shelves for easy pickup. During the pandemic, Sweetgreen used its experience and technology to create outposts at hospitals and other medical facilities, a worthy operation. But according to the Times piece, just 250 outpost locations are operational right now.
In that way, what set the company apart in its early days — a hefty reliance on technology; looking to concentrated pockets of potential customers to juice its sales — seems less important than its expansion outside of those areas. It’s possible the restaurant’s scale and growth strategies could make it more comparable to, say, a Chipotle than a refined dine-in concept — not unlike how a niche startup eventually grows to mass market success.
Sweetgreen has filed paperwork for an initial public offering, and according to an analyst quoted in the Times, a return to offices will be key to a successful IPO, despite its suburban expansion. Time will tell if a return to office work will equal return to Sweetgreen’s heyday — according to the Times, the company said its 2019 revenue exceeded $300 million. Until then, we’ll be watching the salad bowls for signs of eventual recovery.
Grubhub adds some guarantees
A few weeks after becoming an official part of Just Eat Takeaway, Grubhub announced a new program called the Grubhub Guarantee that promises customers on-time deliveries and the lowest price on their order. Grubhub will give customers money (well, in the form of Grubhub Perks) if an order is late or if a customer finds a lower price on a competing third-party service.
Restaurants don’t bear any of the direct cost associated with the program.. “Any Grubhub Perk provided to the diner for either Guarantee is funded by Grubhub,” a spokesperson said. Customers get $5 in perks for a late order, and $5 plus the cost difference up to $15. The deal applies only to prices on Uber Eats, DoorDash, and Postmates (which is part of Uber Eats.)
As with other recently launched Grubhub campaigns, there’s a national TV ad, too. And a larger influencer campaign tapped athletes including soccer star Alex Morgan and sprinter (and most decorated track and field Olympian) Allyson Felix to post on social media promoting the company’s messaging. Just in time for the Olympics!
It’s the latest bid to win customers in what’s become an intense and expensive competition. In the first three months of 2021, Grubhub competitor DoorDash spent $333 million on sales and marketing efforts, more than double the previous year. Uber spent over a billion — though that’s company-wide, not delivery-specific. Still, as Grubhub knows, diners are “promiscuous” — that’s the former CEO’s word, not mine — and not necessarily loyal to one platform. Undercutting on price is one way to get attention, and Grubhub now has a brand new parent company who, judging by its CEO’s Twitter feed, is ready to play to win.
What else is happening?
Resy and Amex deepened their relationship. Years after acquiring reservations platform Resy, American Express is finally working its offering into more of its products. Some Amex cardholders will receive premium access to certain super-hot restaurants. Amex cardholders will also get priority notifications when a reservation they’re interested in opens up, and priority access to Resy restaurant events. The reservation has become a perk.
There’s an app for that. As businesses around the country struggle to fill open positions — particularly those in the service industry — Instawork, an online marketplace that connects available workers and businesses, raised another $60 million. Qualified workers like servers and chefs can list their services on the app. Instawork then checks their references and connects them to open shifts in their field. Workers can review their experience upon completion of each job.
There’s also TikTok. Chipotle will use a new “resumes” feature on TikTok to recruit employees. That is, you can apply to work at a Chipotle by making a TikTok video. The initiative is part of a larger hiring spree with a goal of hiring 15,000 workers.
Oh man, but speaking of TikTok, here’s a story. From the Washington Post, a piece about TikTok influencers and restaurants “leaning on each other” to get through the pandemic. It’s the 2021 version of a story that could have been written a decade earlier about Instagram (well, minus the pandemic part.) The one thing this piece clearly spells out: many TikTok influencers expect their food and drinks to be comped in return for promotion. The restaurants in the piece say it’s worth it — the spikes in business more than made up for any comped meals.
The robots keep coming. Grubhub has partnered with Russian tech behemoth Yandex to deliver food to college students around the U.S. via driverless bots starting this fall.
Papa John’s loyalty program has 20 million members. Last week the company announced it hit the milestone putting it in the same stratosphere as Starbucks, a program constantly lauded for its size and success. Papa John’s loyalty program itself has been around for over a decade, but was revamped in 2018 in the more familiar points-per-dollar-spent framework. Since then, the program has added 8 million members.
Online convenience store / logistics platform GoPuff seems to be getting into restaurants. The company has bought and partnered with local businesses like food trucks and coffee roasters to get past the business of convenience and into prepared foods.
Perhaps you’ve heard of the Restaurant Revitalization Fund, the $28.6 billion fund dedicated to small and independent food service businesses as part of President Biden’s American Rescue Plan. While well-intentioned, the rollout hit a few snags, most notably a trio of lawsuits backed by conservative groups that quashed the priority status for some restaurants owned by women, people of color, and other historically disadvantaged groups.
I wrote a piece about what happened for Food & Wine: Thousands of restaurants lose COVID-19 relief they were promised as revitalization fund allowed to dry up